“If you are an 18-year-old in Ireland today, the excise duty on beer has increased just twice, and been cut once, during your lifetime”
An increase in alcohol affordability represents a threat not just to the health of individuals, but to our society and our economy, warned Alcohol Action Ireland.
Launching its Pre-Budget Submission, the national charity for alcohol-related issues said that alcohol is far from an ’old reliable’ come Budget time and the real price of alcohol has steadily declined in Ireland as disposable income and inflation have increased, with economic recovery now threatening to increase our alcohol consumption beyond its existing, harmful level.
“Ireland has one of the highest levels of both alcohol consumption and binge drinking in the world. Our harmful drinking has a huge impact on our nation’s physical and mental health,” said Suzanne Costello, CEO of Alcohol Action Ireland.
“Beyond health consequences, the harmful use of alcohol brings significant social and economic losses to individuals and society at large. Alcohol’s harm to others is experienced in every Irish community, from the nuisance factor right through to alcohol-fuelled assaults. Although not often publically visible, alcohol’s harm to others within the family also has very serious consequences for the safety and well-being of family members, with children the most vulnerable.
“While those who profit from the sale of alcohol attempt to portray excise duty as an excessively punitive measure, the reality is that our current level of alcohol taxation in Ireland, including both excise duty and VAT, falls €1.6 billion below covering its €3.7 billion cost to society and that substantial tab is picked up by the taxpayer – while we can put no price on the suffering, ill-health and loss of life that harmful drinking causes.”
Ms Costello said that alcohol pricing measures, including an increase in excise duty, are proven, by an overwhelming evidence base, to be one of the most effective ways of reducing alcohol-related harm and, importantly, will also help us progress towards our Healthy Ireland target of 9.2 litres of pure alcohol per capita, down from our current level of 11 litres, following an increase In alcohol consumption during 2014.
“The Minister for Health has described last year’s increase in alcohol consumption as ’a matter of real concern, because it indicates that without policy change, as more people return to work and they have more money in their pockets, they are likely to drink more of it’. The Minister is right to be concerned as alcohol affordability is a function not just of price, but also of disposable income. The more affordable alcohol becomes, the more people drink,” said Ms Costello.
“The dramatic shift in our consumption of alcohol from the on-trade to the off-trade in recent years means that we are now buying a lot more of our alcohol from large multiple retailers, where it is relatively cheap compared to the on-trade, which will become a greater problem as the economy continues to recover.”
Ms Costello pointed out that despite its reputation as one of ’the old reliables’, increases in excise duty on alcohol are not common occurrences and have failed to keep pace with increases in disposable income and inflation.
“During 18 of the last 26 Budgets in Ireland there was either no change in excise duty or a decrease in rates, meaning that the rates of excise duty in Ireland have declined significantly in real terms in recent decades. If you are an 18-year-old in Ireland today, the excise duty on beer has increased just twice, and been cut once, during your lifetime.
“Excise on a pint of lager is now just six cents more than it was in 1994. The reality is that alcohol remains very affordable here, especially when bought in the off-trade, which means that people can drink to harmful levels for relatively little,” said Ms Costello.
“Arguments have been made that a reduction in excise duty would help the on-trade ’compete’ with the off-trade. However any reduction in excise duty, as it applies to all alcohol products, will have absolutely no impact in terms of closing the gap in prices between the off and on-trades.
“In fact, as excise duty makes up a significantly greater proportion of the price of alcohol products in the off-trade, a reduction would only serve to widen the gap, as the off-trade has more scope for a reduction in price with a reduction in excise duty. It would also serve to increase the risks for those vulnerable groups, including young people, who favour the strongest, cheapest alcohol, as well all those in society impacted by alcohol-related harm.
“We therefore recommend that excise duty on all alcohol products be increased in Budget 2016 so that the price of alcohol is set at a level that reflects its significant health, social, and economic impacts; the wide range of harm its consumption causes to others; the costs borne by the State and, ultimately, the taxpayer,” said Ms Costello.
Alcohol Action Ireland has also recommended the introduction of a social responsibility levy on the alcohol industry to address the considerable financial burden the consumption of its products places on the State.
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Notes
For a full copy of Alcohol Action Ireland’s Pre-Budget Submission 2016, please click here
Alcohol – an old reliable?
Despite its reputation as one of ’the old reliables’, along with cigarettes, when Budget time comes around, increases in excise duty in alcohol are not common occurrences and have failed to keep pace with disposable income and inflation.
During 18 of the last 26 Budgets in Ireland there was either no change in excise duty or a decrease in rates, meaning that the rates of excise duty in Ireland have declined significantly in real terms in recent decades.
A major cause of this decline is that excise duties are set as a fixed amount, so inflation automatically reduces their value, unless there is a new level set in the Budget each year, which has not been the case in Ireland.
Just three times since 1990 (1994, 2013, and 2014) has there been excise duty increases across all four categories of alcohol products (beer, spirits, wine and cider) in the same year, with a substantial reduction of excise duty on all alcohol products in 2010.
Five excise duty myths
As well as ignoring the social and economic losses to individuals and society at large caused by harmful drinking, vested interests lobbying for a reduction in excise duty also make a number of claims that are not supported by evidence:
- Tourism does not depend on the availability of cheap alcohol and is not impacted negatively by increases in excise duty. Those who claim otherwise have no evidence to support these claims, while during the two most recent years when excise duty increased (2013 and 2014) the number of overseas visitors to Ireland increased by one million, reaching record numbers in the first half of 2015, as Irish tourism continues to go from strength to strength.
- Despite claims of increasing ’black market’ trade, figures from Revenue show that there were 550 seizures of illicit alcohol totalling 40,237 litres and worth an estimated €600,000 in 2014, down from 507 seizures of illicit alcohol totalling 55,755 litres and worth an estimated €1.5 million in 2013. Up to June 2015, there has been 282 seizures of illicit alcohol totalling 19,363 litres and worth an estimated €200,000. This is a context where we consumed 39,526,406 litres of pure alcohol in Ireland last year, so even assuming all of the illicit alcohol seized in 2014 comprised spirits and applying an ABV of 40% to it, this amount still represents just 0.04% of the alcohol consumed in Ireland last year.
- A reduction in excise duty would not help close the price gap between pubs and the off-trade, particularly supermarkets. Only minimum unit pricing would help achieve this. In fact, as excise duty makes up a greater proportion of the price of alcohol products in the off-trade, it would only serve to widen the gap. While vested interests attempt to portray excise duty as solely responsible for the struggles of the pub sector, the reality is that the recession, the subsequent impact on disposable income, and the shift of drinking culture towards the far cheaper alcohol in the off-trade have had the greatest impact. Excise duty, as a proportion of the pint, remains lower now than it was ten years ago.
- An excise duty increase on alcohol in Ireland has no impact on the jobs or the output of the exporting sector.
- The view of vested interests on excise duty completely ignores the economic reality that money not spent on alcohol through a reduction in consumption does not simply disappear, but is spent on other goods and services, which they do not directly profit from, but still create employment and contribute to the wider economy.
